Washington is gearing up for a review of the U.S.-Mexico-Canada Agreement (USMCA). The timing couldn’t be more consequential, since lawmakers will determine whether Canada, the United States and Mexico extend their three-way trade pact for an additional 16 years. What’s really at issue, however, is China’s expanding presence in global industry. Any decision on the USMCA will have a significant effect on manufacturing, supply chains and economic security across North America.

If China is indeed the “big elephant” in the room, then it’s possible Canada is steering in the wrong direction. Canadian Prime Minister Mark Carney recently announced a strategic economic partnership with Beijing that could undermine the USMCA and weaken the integrated North American economic system.

At the World Economic Forum in Davos, U.S. Treasury Secretary Scott Bessent sounded the alarm on challenges for the United States and Canada in global trade. In an interview, he made clear that, despite negotiations with China, the administration remains committed to U.S. sovereignty and to de-risking supply chains from an over-reliance on Beijing.

Significantly, Bessent criticized Canada’s decision to expand cooperation with China across trade, energy and industrial supply chains. Bessent warned that closer Canadian ties with Beijing could not only compromise the USMCA but also deeply damage U.S. industries that are integrated with Canadian suppliers.

President Trump is threatening to impose 100 percent tariffs on Canadian imports if Carney continues to pursue a trade agreement with China. His concern is understandable — that Canada could become a “back door” for Chinese goods to enter the U.S. market. There’s a precedent for this, since Canada is happily purchasing subsidized, low-cost steel from China. To sustain its domestic steel industry, Canada is selling its steel to the United States, undercutting America’s steel producers. 

Essentially, Chinese steel doesn’t need to enter the United States directly to do damage. China can suppress global steel prices, undercut the Canadian market and drive Canadian producers to export more steel to the United States, where duty-free access under USMCA enables them to displace American production.

Zach Mottl is the chair of the Coalition for a Prosperous America. He wrote this for InsideSources.com.